# Paying for Physician services

Paying for Physician services
Paying for Physician services
Subject: Healthcare
Mr. Smith is a 68-year-old Medicare beneficiary. He sought treatments from Dr. Johnson.
Assume the following values for the services provided by Dr. Johnson:
Categories
RVU
Geographic Cost Index
Product
Work
27.45
1.092
29.98
Practice Expense
43.05
1.743
75.04
Malpractice
10.32
0.543
5.60
Conversion Factor: 64.43
How much will Medicare pay Dr. Johnson if Dr. Johnson is a Medicare participating
physician? How much out-of-pocket payment will Mr. Smith be responsible for?
How much will Medicare pay Dr. Johnson if Dr. Johnson is a Medicare non-participating
physician who elects assignment? How much out-of-pocket payment will Mr. Smith be
responsible for?
How much will Medicare pay Dr. Johnson if Dr. Johnson is a Medicare non-participating
physician who does not elect assignment? How much out-of-pocket payment will Mr. Smith
be responsible for?

PAYMENT FOR PHYSICIAN SERVICES 2
Categories
RVU 27.45 43.05 10.32
Geographic Cost Index 1.092 1.743 0.543
Product 29.98 75.04 5.60
Categories RVU Geographic C I Product
Work. 27.45 1.092 29.98
Practice expense 43.05 1.743 75.04
Malpractice 10.32 0.543 5.60
Conversion factor: 64.43

Payment for Physician Services Using Medicare Payment Schedule

Question one (Medicare participating physician)

Medicare Payment (Participating Physician) = Work RVU 1 x Work (GPCI) 2 + Practice Expense
(PE) RVU x PE GPCI + Malpractice (PLI) RVU x PLI GPCI x CY 2014 Conversion Factor
= 24.45 x 1.092 + 43.05 x 1.743 + 10.32 x 0.543 Total RVUs = \$110.61531
=\$110.61531 x 64.43 (Conversion Factor)
=\$7,126.94
Out-of-pocket payment
Medicare payment accounts for 80% of total payment while the remaining 20% is out-of-pocket
payment meaning:
\$7,126.94 is 80%
Therefore,
Out-of-pocket payment = \$7,126.94 x 20/80
=\$1,781.74

Question two (Medicare non-participating physician who elects assignment)

PAYMENT FOR PHYSICIAN SERVICES 3

The total payment for Medicare participating physician is given by:
Total payment = Medicare payment + Out-of-pocket payment
= \$7,126.94 + \$1,781.74
= \$8,908.68
In the case of Medicare non-participating physician who elects assignment the total payment
should be 95% of the total payment for Medicare participating physician;
Thus, it is given by: \$ 8,908.68 x 0.95 = \$8,463.25
Medicare payment (80% of the total payment) = \$8,463.25 x 0.8 = \$6,770.6
Out-of-pocket payment (20% of the total payment) = \$8,463.25 x 0.2 = \$1,692.65
Question three (Medicare non-participating physician who does not elect assignment)
In this case there is no payment from the Medicare; however, the total payment can be adjusted
to 109.25% of total payment for a Medicare participating physician.
Therefore, the out-of-pocket payment is given by:
Out-of-pocket payment = \$8,908.68 x 1.0925
=\$9,732.73

PAYMENT FOR PHYSICIAN SERVICES 4

References
Centers for Medicare and Medicaid, (2013). Medicare Claims Processing Manual:
Physicians/Nonphysician Practitioners.